Asia-Pacific leaders are set to call on oil producers to boost supply as the price of crude reaches levels not seen since the 1990 Gulf War, a senior APEC official said on Saturday.
The region is unlikely to face a new inflationary spiral linked to the soaring prices, but oil-dependent economies such as South Korea could be hurt, warned a report by the Asia-Pacific Economic Cooperation forum's economic committee.
"In the upcoming leaders' summit, they will discuss the oil price issue, and it is possible that leaders and ministers will call for an increase in oil supply," the committee's chairman, Mitsuru Taniuchi, told a briefing.
Leaders of the 21-member APEC group, including US President Bill Clinton, will hold a two-day summit from Wednesday in oil-rich Brunei.
"Higher oil prices, if sustained, could pose a downside risk on the generally positive outlook of APEC economies through next year," Taniuchi's report said.
A whole percentage point could be lopped off next year's APEC-wide growth forecast of 3.5 percent if crude oil continues to fetch around 35 dollars a barrel for a prolonged period, he said.
APEC members include major oil producers such as Canada and Mexico which stand to gain from crude prices hovering around a 10-year high.
But even they would lose out if the high oil price depressed economic activity among key trading partners, said Taniuchi, who is a deputy director general of coordination in Japan's Economic Planning Agency.
Under fierce pressure from the West, the Organization of Petroleum Exporting Countries (OPEC) has unveiled four production boosts this year, but none has done much to rein in prices.
APEC may consider a collective stand on oil, despite counting oil producers such as Indonesia -- which is also an OPEC member -- among its ranks, Taniuchi said.
"OPEC is not the only supplier. There are other suppliers," he told the briefing.
"The United States, for example, and Japan have been calling for increased supplies of oil individually, and the question is whether a similar thing could be done as a group.
"That's something leaders have to discuss, because APEC includes oil-producing economies as well."
Senior Brunei petroleum official Ahmad Ibrahim welcomed efforts to curtail energy prices, despite oil and gas accounting for half his tiny nation's entire economic activity.
"In the interest of both sides and to avoid market volatility of oil prices, we welcome initiatives that will best reduce volatility and promote long-term market stability," he said in a statement.
Oil assessments carried out by 14 APEC members suggested that a region-wide recession or stagflation -- depressed growth coupled with high inflation -- as seen in the 1970s oil shocks were not a pressing fear.
"However, a few developing member economies in the survey expect greater impacts on their economies," said the report by Taniuchi.
"They have significantly increased oil dependency due to industrialization and motorization. There is a concern that higher oil prices, if sustained, would set back the recovery from the Asian crisis."
South Korea and Thailand were at particular risk of relapsing just as they emerge from the devastating regional crisis of 1997, warned Taniuchi.
But the region's two most oil-thirsty nations, the United States and Japan, were at far less risk of a new energy shock.
Both have significantly reduced their reliance on oil as a share of gross domestic product, but could expect a slight upturn in inflation if high prices persist, APEC reported -- BANDAR SERI BEGAWAN (AFP)
© 2000 Al Bawaba (www.albawaba.com)
